| A | B |
|---|
| demand | amount of a good or service that consumers are able and willing to buy |
| supply | amount of a good or service that producers are able and willing to sell |
| utility | ability of any good or service to satisfy consumer wants |
| market | process of freely exchanging goods and services between buyers and sellers |
| real income effect | inabliity to buy the same quantity of a good if prices rise while income does not |
| elastic demand | situation in which the rise or fall of a products price greatly affects the amount people will buy |
| ineleastic demand | situation in which a product's price change has little impact on the quantity demanded by consumers |
| demand curve | line that graphically shows the quantities demanded at each possible price |
| demand schedule | table showing quantities demanded at different prices |
| elasticity | economic concept dealing with consumers' responsiveness to an increase or decrease in price |
| supply curve | line that graphically shows the quantitities supplied at each possible price |
| equilibrium price | price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy |
| shortage | situation in which the quantity demanded is greater that the quantity supplied |
| surplus | situation in which the quantity supplied is greater that the quantity demanded |
| voluntary exchange | occurs between buyers and sellers in a free market economy |
| diminishing marginal utility | as you consume more of an item,you will receive less satisfaction from each additional one. |
| substitution effect | using a similiar product in place of another item due to higher price or lack of availability |
| law of diminishing returns | continued addition of workers will eventually result in lower marginal production |
| profit motive | encourages suppliers to produce different and better products |
| As price goes up . . . | demand goes down |
| As price goes down . . . | demand goes up |
| Supply goes up . . . | as prices increase |
| Supply goes down . . . | as prices decrease |
